China: Green shoots are emerging. We are initiating a
new series of reports to track the leading and coincident
indicators to help gauge the growth momentum of
aggregate demand. As shown below, some of the
leading indicators have improved recently, including
newly started FAI growth, land sales, money supply, and
the Baltic Dry Index. Meanwhile, a few coincident
indicators – such as SOE FAI, railway investment,
electricity and cement production, and imports – also
confirmed that domestic demand is beginning to
strengthen. We think policy makers are likely to lean
more towards “wait and see”, especially in the absence
of signs that employment is deteriorating.
Hong Kong: HKMA intervenes; monetary base
expands. The HKMA’s recent purchases of US$ in the
FX market has gathered significant market attention.
Four purchases, totaling US$1.85 bn (HK$14.4 bn),
have taken place since last weekend, the bulk of them
recorded in New York trading. Upon settlement, the
aggregate clearing balance of the Hong Kong banking
system will increase by the same amount by today, to
reach HK$163 bn, up from the HK$149 bn level
maintained for nearly two and a half years, albeit still far
below the peak level of HK$320 bn in November 2009.
Taiwan’s 3Q GDP growth below expectations.
Taiwan's statistics office reported advance estimates for
3Q12 GDP data. Taiwan’s real GDP increased 1.0%
YoY in 3Q12 (vs. -0.2% YoY in 2Q12), lower than the
consensus forecast of 1.5% and our estimate of 1.4%.
On a sequential basis, real GDP expanded 3.5% QoQ
(seasonally adjusted, annual rate), compared with 2.2%
QoQ in 2Q12 and 1.6% QoQ in 1Q12. The sequential
growth indicates that the economy is on its way to a mild
recovery, in our view. Meanwhile, the statistics office
also downgraded its full-year forecast for Taiwan's 2012
GDP to 1.05%, which is significantly lower than the
earlier forecast of 1.66% in August.